Should You Buy the Dip on Super Micro Stock?
Along with chipmaker Nvidia, Super Micro Computer (NASDAQ: SMCI) has been one of the biggest beneficiaries of the generative artificial intelligence boom, helping turn AI chips into user-ready servers. However, after rising by over 2,200% over the last five years, the company's share price growth has begun to stall. Let's dig deeper to determine if it's time to buy the dip or run for the hills.
Super Micro's shares have fallen around 26% since it reported fourth-quarter earnings on Aug. 6. And this might be surprising, considering the numbers don't actually look that bad compared to a more average company. The ever-rising demand for AI hardware sent revenue up 144% year over year to $5.3 billion, while net income jumped 82% to $353 million.
With that said, Super Micro's gross margin (which measures the selling price of its products relative to their direct production costs) indicates a worrying trend -- it fell to 11.2% compared to 17% this time last year.
Source Fool.com
